Suppose government spending decreases by $10 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)
A. increase in equilibrium real GDP equal to $50 billion.
B. decrease in equilibrium real GDP equal to $50 billion.
C. decrease in equilibrium real GDP equal to $80 billion.
D. increase in equilibrium real GDP equal to $80 billion.
Answer: B
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Which of the following is the most essential prerequisite for successful conduct of the "game" of urban traffic?
A) An advance plan to coordinate the moves of participants B) Drivers who care as much about other people's interests as their own C) Extensive information on other drivers' destinations and objectives D) General consensus on and following of traffic rules
In a recent article, two economists estimated that the 37.5% increase in price that would result from a 75 cent tax increase on cigarettes would lead to a decrease in smoking among college students of 30%
What can you conclude about the demand for cigarettes among college students? A) It is price elastic. B) It is price inelastic. C) It is unit elastic. D) It is perfectly inelastic.
Suppose the economy is at a position below its institutional production possibilities frontier. To improve this situation, Keynesian economists might propose that government __________ taxes, which will cause the aggregate demand curve to shift to the __________ and Real GDP will __________
A) increase; right; increase B) increase; left; decrease C) decrease; left; decrease D) decrease; right; decrease E) decrease; right; increase
Education is a ________ good that creates a ________ externality.
A. public; negative B. public; positive C. private; positive D. private; negative